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Select Committee Starts Inquiry into UK Superfast Broadband Strategy

Tuesday, July 28th, 2015 (1:28 pm) - Score 800

A House of Commons Select Committee for the Department of Culture, Media and Sport (DCMS) has launched yet another inquiry into the national Broadband Delivery UK programme, which will focus on the coverage, delivery and speed of superfast broadband and mobile connectivity across the UK.

At present the existing Broadband Delivery UK programme and related projects aim to make fixed line “super-fast broadband” (24Mbps+) services available to 90% of premises by 2016 (Phase 1), as well as 95% by 2017 (Phase 2); this rises to 99% by 2018 when you include mobile and other fixed wireless solutions. So far this has involved a total public investment of around £1.7bn.

On top of that several related schemes are also working to improve the coverage of mobile networks, which include last year’s £5bn agreement that will see all four of the main Mobile Network Operators (O2, EE, Three UK and Vodafone) extend their geographic network coverage (voice and text) from 80% today to 90% by 2017; although data services (3G and 4G) will only be pushed to 85%. On top of that 4G population coverage is also expected to reach 98% within the next year.

Jesse Norman, Select Committee Chairman, said:

Proper digital connectivity is key both to the well-being of many communities and to Britain’s economic future. Yet many people and businesses are unable to receive the digital access and services they need. This inquiry is designed to find out exactly why that is, and how to fix it.”

As such the new inquiry – ‘Establishing world-class connectivity throughout the UK‘ – will look at both the progress of the existing programmes / agreements and what needs to be done in order to connect the most remote areas (i.e. those within the final 5% – approx. 1.5 million premises). The Committee is thus seeking responses to the following questions.

Broadband Inquiry – Written Evidence Questions

* What role should Government, Ofcom and industry play in extending superfast broadband to hard-to-reach premises?

* Is there sufficient competition in these markets? If not, how can any market failures best be addressed given the investments already made?

* What are the commercial, financial and technical challenges the programme faces in reaching the final 5%? What technologies exist to overcome them? What investment is required, by whom and for what return?

* Given that in practice a Universal Service Obligation could not capture 100% of households, what should a USO for broadband look like?

* What are other countries doing to reach ‘not-spots’? How affordable are their solutions?

* Should Government be investing more in research and development into finding innovative solutions to meet the communication needs of remote communities?

* Are BT and other communication companies investing sufficiently themselves in reaching these groups?

* What investment and progress are the mobile network operators making in improving mobile coverage across the UK and enabling a swifter process when users choose to change provider? How could these best be improved?

* How have the existing Government broadband programmes been delivered?

Broadly speaking the Government’s first 90% target for superfast broadband coverage, which is almost exclusively working with BT based contracts and the related deployment of ‘up to’ 80Mbps FTTC and some small patches of 330Mbps capable FTTP, appears to be making reasonable progress and seems likely to hit its target.

But going from 90% to 95% is already proving to me more complicated, which is highlighted by the recent rejection of BT’s bid for a related contract in Devon and Somerset (here). The climate of increased austerity (funding cuts) has made life very difficult for Local Authorities, some of which are clearly struggling to find the necessary investment and that will only get harder.

Tackling the Final 5% (Universal Coverage)

It’s well understood that connecting those in the final 5% will be an extremely expensive task, which is one of the reasons why BDUK has been running seven Market Test Pilots with different solutions (fixed wireless, satellite and fibre optic etc.) in order to help identify the best options for connecting remote areas.

The pilots are important because the situation in some local authorities clearly shows that we shouldn’t just be relying upon BT to pick up all the contracts, which will naturally only be commercially interested in those areas that can deliver a return. As such we think that alternative network providers need to be given much more consideration. We have seen some examples of this, such as with several Gigaclear contracts, but Phase 3 may have to go further.

On top of that the Government are also mooting the prospect of raising the current Universal Service Obligation (USO) on BT and KC, which upon request requires them to install a phone service that’s capable of supporting slow dial-up Internet speeds, to broadband capable of at least 5Mbps (Megabits per second); this could be challenging to deliver in some areas.

Never the less the Government’s Digital Economy Minister, Ed Vaizey, has promised to make it “absolutely clear” where superfast broadband will be delivered in the future and he intends to publish a plan for reaching the final 5% “before the end of the year” (here). But one report suggests that £500m may be needed to achieve such a goal (final 5%) and this could potentially be funded by a new TAX on broadband ISPs (here), which is unlikely to be very popular.

The deadline for written submissions to the cross-party inquiry is Wednesday 30th September 2015.

Leave a Comment
19 Responses
  1. Avatar Al says:

    A Tax is unlikely to be very popular amongest those who already get superfast speeds, for those in the final 5% I doubt they will care if they have to pay a little extra a month in order to get faster speeds.

    1. Avatar Steve Jones says:

      The problem is that it will only be a little extra per month if everybody pays. If only those in expensive-to-reach areas have to pay the extra, then the figure will be a lot. It’s simple maths. If 100% pay then the “surcharge” will by one tenth the amount that just 10% would have to pay.

  2. Avatar Jazmin says:

    I would oppose paying extra so some Lord in a £6mill country pile can finally get broadband

    1. Avatar Al says:

      And what about the hundreds of thosuands of your fellow citizens, do they not deserve superfast access as well? And lets remember not all of the hard to reach areas are in the countryside isn’t there some in the more urban areas, what about EO lines?

      If they don’t I propse a new charging scheme, the faster the speed that you can achieve the more you pay. So those that can only get upto 8Mbps only pay say £4/month, those that can get upto 40Mbps pay £20.

      At the moment the reverse is often true, those in the final 5-10% are ofetn on ADSLMax upto 8Mpbs non-LLU exchanges. So they have no competition to drive down prices so can end up paying more for an inferior service

    2. Avatar AndrewH says:

      That’s all very fine but I live in a very rural area, run an IT business and have 1.7Mbps.
      My business is now starting to suffer. I quite simply can’t do as much work as I would like as I am waiting for the Internet all the sodding time. It’s very very frustrating.
      I’m a sole trader and probably do 1 PC per day whereas if I had just 30Meg I could do 3 or 4!!
      It is a ludicrous situation.
      I’m afraid the Government needs to stop uming and ahing about competition and where the return is is coming from and just plough a couple of Billion into the final 10%.
      Wireless? Satellite? Have they even noticed the increasing and accelerating advancement of tech?
      In 5-10 years time FTTC will be obsolete let alone wireless. It will have all been a waste. Mark my words.
      Get some cash, get FTTH in, job done for the next 100 years at least.
      Can’t see it though can they!
      Numpties

  3. Avatar dragoneast says:

    Yep, the one thing all these inquiries tend to skim over is who is going to pay for it? Ultimately of course it’s the consumer. But the old argument still applies that conventional tax (unacceptable) is generally progressive (the more you have the more you pay), which is rarely the case for fees and (sur)charges, so the hidden effect is that the poor end up subsidising the rich. Personally I’d like to see rather more self-help, and less moaning, but that’s not the way we tend to do things in the good ole UK where like little children we all want to get our fingers in the pie.

  4. Avatar NGA for all says:

    They have much to go at!
    BT’s capital conribution to BDUK – £353m of the £1bn is not visible in the process.
    The operation of gap funding, which is essential to the working of the state aid condition is not discernable.
    The impact of BT excess costs, confirmed by NAO Jan 2015 in the 2012 Framework, particularly the lack of a material level of FTTP in-fill in rural, given the budgets available.
    Once BDUK have funded the 30,000 cabinets with <£1bn subsidies, there will still be £500-£600m in an investment fund with no plan.
    The location of the USC premiums and whether anything has been delivered.
    The location of excess payments to BT by areas like Wales who are paying proxy costs.

    1. Avatar fastman says:

      procurement cost of everything — value of nothing !!!

  5. Avatar fastman says:

    nga

    They have much to go at!
    BT’s capital conribution to BDUK – £353m of the £1bn is not visible in the process.
    The operation of gap funding, which is essential to the working of the state aid condition is not discernable.

    not even worth responding to !!!!

    1. Avatar NGA for all says:

      Fastman, why not try and provide evidence that any of the capital BT was offering was used in planning the depth of the phase 1 rollout?

      Where in BT public accounts is there any reference to the matched funding provided to BDUK?

      Where in any audit report (NAO (2), Welsh Audit, Scottish Audit, Oxera (State Aid) has explicit reference been made to a capital payment by BT in the BDUK process?
      The exception at present is Surrey but no amount has been made public.

    2. Avatar TheManStan says:

      BTOR are under no contractual obligation to spend £1BN…

    3. Avatar NGA for all says:

      @The Man Stan, They are under the state aid obligation to pay approximately 1/3 of the capital cost.
      UNder the state aid obligation, the gap funding model if operating should mean cabs in towns and housing estates are mostly paid by BT while more rural is paid by public subsidy.

    4. Avatar TheManStan says:

      Which means you don’t understand your own arguments… particularly over “excess costs”.

      If BT have over-budgeted due to inadequate models… then everything is coming in under budget… with monies being returned to BDUK… then they don’t need to spend £1BN.

    5. Avatar NGA for all says:

      @The Man Stan, ‘excess modlled costs’ was a term used by the NAO in their second report to escribe the 38% inflation of costs. These funds plus BT capital could have been used to plan a more complete rollout for the UK economy, benefiitng rural customers and BT shareholders.

    6. Avatar TheManStan says:

      Inflation are your words, not the NAOs. NAO words are “under the estimated price”.

      You fail to understand that each BDUK project has to be considered independently and that costing for each would be scaled to the model. Savings based on economies of scale were not incorporated because each project is independent. To say that full costings ignoring other projects is contingency is not correct, as the projects are not linked, except by source of funds.

      As for surplus funds, it’s the individual projects’ faults for not incorporating any contingency plans for surplus funds to be programmed should time be left before deadlines.

    7. Avatar NGA for all says:

      The models had 38% excess costs – see para 3.7 of NAO II, BT having denied such an occurance at two PAC public hearings. I assume the information provided for first NAO report was just another gambit. The models unlikely to contain the BT capital contribution so it was unavailable to stretch the rollout.

      Your analysis is shockingly shortsighted, for cusomers, shareholders and indeed Openreach.

      This investigation, like the NAO work might allow more of the funds to be kept in play.

    8. Avatar TheFacts says:

      @NGA – when do you expect your scheme for communities to sue the directors of BT to happen?

    9. Avatar NGA for all says:

      @The Facts – There is no scheme, but there is evidence which this and other hearings will add too. I referenced the possibility out of curtesy to those who are being asked to behave in a manner counter to the BT Values and the public interest. They at least can gather the emails chains which give the commands and instructions to carry out the objectives being set. Ditto for public officials.

      The revised state aid measure if it forces the verification of BT capital and a meaningful application of the gap funding principal, will hopefully remove the need for communities to act. It is not something anybody would wish for.

      If you have read LC 228 then you will understand it is not the directors who might be refernced in the any proceedings but those in charge day to day in each area. Note they would need their own legal representation at their own cost. It is their names that appear in the proceedings with the companies claiming they went beyond their remit. The capital offered was only a gambit type talk.

    10. Avatar TheFacts says:

      @NGA – link to LC228 please. What type of community might act in this and why?

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